Impact of Shelf Space

Journal of Business Management & Social Sciences Research (JBM&SSR)
Volume 3, No.10, October 2014
ISSN No: 2319-5614
Impact of Shelf Space on Purchase Behavior of Consumer:

Dr. Shweta Choudhary, Assistant Professor, Shri G.S. Institute of Technology and Science, Indore, Madhya Pradesh,
India
Abstract
When a consumer push the cart to the passage of a supermarket he finds lot of product categories with lots of competitive
brands entangling him. This is due to the limited shelf space availability and the thronging brands striving to get in the
basket of the customers. The shelf space is a crucial strategy which influences the sales and marketing effectiveness. It can
be evidently noticed that the lower shelf seeks less attention than upper shelves thus significant difference between the
sales of the products / brands can be observed placed in two different shelves. However acquiring a shelf space is a costly
affair. A supermarket or a retailer in order to give space to the new product has to exonerate any other product, which
requires labor and materials cost, data entry in the computer software, labeling etc. A supermarket or a retailer has to be
adequately compensated for taking all such pains.
The present research is a conceptual research which attempts to study the impact of shelf space on the purchase behavior
of the consumers.
Keywords: Brand, Product, Retailers, Shelf space, Supermarket
Introduction
Till second half of 1970s majority of the companies restricts their promotional efforts outside the sale area.
These external promotional activities include advertisement, marketing, research & development outside the
retail place. In the year 1973-74 the concept of internal
techniques begin to gain attention when the concept of
`atmospherics` was introduced by Kotler. The term atmospherics in marketing context refers to the environmental cues that influence customer`s shopping decision.
As per Markin the retail store is a bundle of cues, messages & suggestions which communicate to consumers
The term atmospherics which includes elements like
lighting, music, color, aisle management, category management, shelf organization start gaining attention. Out
of all these essentials shelf organization becomes a crucial factor due to its limited availability.
Shelf Space refers to the space available in a store or
place to display particular goods for sale. In recent years
competition between the brands has become fiercer owing to ample of varieties or brands available in any particular product sector. Looking to the increase in number
of products to be displayed the amount of space available to display them is decreasing. On the basis of modern
concept Jo Dikhta Hai Wo Bikta Hai the competition to grab the best place in the shelves has geared up.
Companies are ready to pay premium to get appropriate
space in the shelves in order to boost their product sales.
All these hustle & bustle have made shelf space a very
crucial thing.
Literature Review
Daniel Corsten, Thomas Gruen, (2003) "Desperately
seeking shelf availability: an examination of the extent,
the causes, and the efforts to address retail
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outofstocks", International Journal of Retail & Distribution Management, Vol. 31 Iss: 12, pp.605 617, With
all the hype around efficient consumer response (ECR)
and the brave new world of technologies, one would
believe that retail outofstocks have gone down over the
last ten years. That is wrong. Retailers have been struggling with considerable outofstocks for decades with
little evidence of improvement. A similar wrong belief is
that shoppers are also still unwilling to accept low service levels. In fact, increasingly, consumers switch
brands when they do not find the brand they wanted. But
retailers must be wary, because the results of the research show that increasingly shoppers switch stores
quickly and may never come back. So, who is to blame?
The supply chain. And where to tackle it? On the shop
floor. Over the past two years, worldwide study has
been conducted of the extent, causes, and consumer responses to outofstocks in the fastmoving consumer
goods industry.
John Fernie, David B. Grant, (2008) "Onshelf availability: the case of a UK grocery retailer", The International Journal of Logistics Management, Vol. 19 Iss: 3,
pp.293 308, The purpose of the research was to determine if any relationship existed between OSA (On Shelf
Availability)and store picking for home shoppers, OSA
and promotions and OSA and store size. This paper discusses the academic and practitioner literature on OSA
and outofstocks (OOS) and then presents a single company, indepth case study of one multiple grocery retailer. Primary research was undertaken with senior managers of the company but also at regional distribution centre (RDC) and store level to chart how new logistics
strategies were implemented at an operational level in
Scottish stores.
2012 The Author Blue Ocean Research Journals 2012

Open Access Journals
Blue Ocean Research Journals 28

Monica Gomez Suarez (2005) "Shelf space assigned to

store and national brands: A neural networks analysis",
International Journal of Retail & Distribution Management, Vol. 33 Iss: 11, pp.858 878, suggests that the
research has practical implications for retailers because
their overmerchandizing of own brands can damage
the overall profitability of the category. On the other
hand, national leading brands will have to invest more
resources in advertising to sustain customer loyalty.
Timothy L. Urban, (2002) "The interdependence of
inventory management and retail shelf management",
International Journal of Physical Distribution & Logistics Management, Vol. 32 Iss: 1, pp.41 58, Acknowledges that the effect of displayed inventory on retail
sales is widely recognized in the logistics, marketing and
operations management literature and has been empirically verified. However, neither the marketing literature
(shelfspace allocation models) nor the operations management literature (inventory control models) has appropriately modeled this effect. The displayedinventory
newsvendor problem is developed and analyzed, utilizing a simple model to illustrate the interdependencies
between the inventory and spaceallocation decisions.
The model is then extended to the multiitem case, which
can be incorporated as part of a comprehensive
shelfmanagement system.
Shelf Space Evaluation:

Profit in the business can be boost in two ways:
a) Decrease the Cost
b) Boost the Sales
The cost reduction tactics are operational in nature which
mainly is based on efficient utilization of resources, personnel & technology. However sales are market driven
& mainly depend on promotional elements. The promotional activities may be Out-of-Store or In-Store. Among
In-Store tactics Shelf Management plays a crucial part
due to its restricted availability. Shelf Management can
be viewed from two different perspectives:
a)
From Retailer perspective: They want to manage

shelf space in such a manner that maximum categories can be displayed which in turn will fetch them
high income. They are not much bothered with
brand identity. They want to make maximum utilization of the available space area. Main object of retailer is to maximize profit & this can only be
achieved by influencing shoppers to spend more on
unplanned shopping pattern. Shelf space plays a vital role in case of products whose buying pattern is
impulsive i.e the shoppers have not planned for
them, so by well display of these products business
can be accelerated.
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ISSN No: 2319-5614
b) From Manufacturer point of view: Manufactures

are very much concern regarding brand identity so
they want more & appropriate shelf space for their
product which in turn will draw more consumer attention & ultimately boost their sales. Shelf space is
an expensive resource which should be planned
cleverly. Companies pay high amount to retailers to
get premium space in shelf with a motive of high
sales. In case if sales are not rising even after premium display then manufacturers shall consider other
factors also like price competitiveness, taste etc.
Shelf space helps manufactures in evaluating his
product by providing a platform where the product
can compete with other prevailing brands.
c)
From Customer`s Perspective: To understand

shelf space from consumer point of view we need to
first understand shopping behaviour of the consumers. As per Diez de Castro (2004) there are 3 different kinds of the shopping behaviors followed by the
customer.
1) Planned Purchase: Here the customer designs his

shopping pattern beforehand only i.e what to buy,
how much to buy, which company product to be
purchased etc. Before arriving retail shop only they
are very clear regarding the shopping they have to
conduct.
2) Suggested Purchase: Here the customer shops that
product which is not necessarily in his purchase list.
Such purchases are result of sales promotions made
on the spot like 40% off, buy 2 get 1 free etc.
3) Impulsive Purchase: As per Schulz (2005) 70% of
all the purchases are impulsive. Proper display &
visibility gives rise to impulsive purchase.
Consumers can`t be expected to be rational while making every purchase, many a times they rely on product
cues for making purchase decisions. As per Hoch &
Deighton (1989) when a shopper enters any retail shop
then he start browsing from bottom to top & not top to
bottom. Products that placed in bottom shelves get relative advantage over the ones which are placed on top
shelves. Many a times consumers are very casual i.e instead of searching around they pick the product which
they first come across. Further spot promotional sales
tactics also influence consumer`s decision. Products having offers, discounts etc shall be displayed properly so
that shoppers easily catch eye on them. Amongst all the
purchase cues Shelf Space is an important cue due to its
limited availability & fixed nature.


Advantages of Shelf Space:

a)
Shopping becomes Time Economic: In today`s

busy world where time is money consumers want
their shopping to be time economic. They dont
want to waste their time in loitering around. To a
great extent their shopping decisions rely on display
of products. The more efficiently a product is displayed the higher are the chances of that product to
get sold.
ISSN No: 2319-5614
managing shelf space following factors shall be taken

care of:
a) Proper Guidance: As per Global New Products
Report from New York based Nielsen 72 % of consumers are more expected to purchase any product
when they come know about it in a store. Keeping
this thing in mind retailers shall make optimum utilization of the space available & attempt to provide
all the information shoppers seek like information
regarding nutritional value or brand history or ingredients details may be a great help for shoppers.
b) Informative: Shoppers to a great extent depends on

how the products are priced & described. If a shopper is brand loyal then shelf space helps him in conveniently tracing the product (if available) or to go
for substitute if that particular product is not available.
b) Ambience: Size, shapes, colors should be such that

make tracking any product easy for the shoppers.
Signage to point out where the product can be found
helps shoppers in doing shopping conveniently.
c)
c)
Reduction in Operational Cost: Well designed

shelf space improves overall performance of the
store thus reducing its operating cost. If the retailer
is well aware of the turnover & demand of the various categories of products then shelf space allocation can help him in reducing inventory cost.
d) Prevent STOCK OUT: Well managed Shelf space

not only attracts the customers but also prevents
stock outs. Stock Out is the position when particular
brand or product goes out of stock. There are certain
product categories where shoppers make instant decision & chances of stock out is high. In case of
Stock Out condition some customers go for another
brand , some delay their shopping while some went
to another outlet. Waller et al (2009) in his study
give reference of USA market where if such situation arises then approx 31 % of the total customers
will switch to another store, 22 % will go for substitution & rest 16 % will delay their purchasing.
Shelf Space Management :

Management of shelf space is not a easy job. Shelf space
is managed with mainly two objectives:
a) Retailers aim to create friendly & comfortable
arrangements of product display which makes
shopping a easy job.
b) Manufacturers & retailers both aim to optimize
the level of profit on the cost related to shelf
space.
Retailers while allocating shelf space consider the profit
margin & turnover of the products. The products whose
sale volume is high but profit margin is less usually get
avoided in getting premium place in shelf space. Managing shelf space is an important task as it involves customer satisfaction & helps in optimizing sales. While
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Category Management: While allocating space to

different products their characteristics shall be considered. Say for example products like toilet paper
are very sensitive towards price factor, so cheap
brands shall be given more space compared to costly
ones in order to avoid STOCK OUT situation. In the
same way there are certain categories where shoppers are brand loyal eg toothpaste thus popular
brands in such case shall be given more space or
else in case of STOCK OUT the shopper will go to
another outlet for purchasing same brand which in
turn will result in business loss.
Correlation of Shelf Space & Obesity:

Overweight now has become global threat. In a study
cited as Norman, M. , Hoffmann, J. , & Cheskin, L. J.
(2014) Shelf Space Devoted to Nutritious Foods Correlates with BMI. American Journal of Food and Nutrition, 2(2), 18-22 it was found that there is a correlation
between the shelf space allocated to different categories
of food material & BMI (Body Mass Index) in number
of nations.
a) Lower national BMI was found associated with
higher % of shelf space allotted to vegetables, fruits,
canned vegetables, & canned fruits.
b) Higher national BMI was found association with
higher % of shelf space allotted to cereals, pastas,
grains, bread, junk food and dairy products.
Pie charts representing the distribution of shelf space
devoted to various types of food. Food was divided into
the four categories: Grains, Fruits and Vegetables, Soda
and Junk food and Dairy. Other categories of food in the
store were not included.


ISSN No: 2319-5614
Source : "Shelf Space Devoted to Nutritious Foods Correlates with BMI." American Journal of Food and Nutrition 2, no. 2 (2014): 18-22
Some of the Shelf Management Models:
Conclusion
From time to time various models have been developed

to help retailers in managing shelf space efficiently,
some of the famous models are as below:
a) Hansen & Heinsbrock 1979 :Shelf space allocation model as a constrained Optimization problem
b) Corstjens & Doyle 1981: Shelf space allocation
model
c) Corstjens & Doyle 1983: Dynamic Shelf allocation
model
d) Bultez & Naert 1988: S.H.A.R.P model (Shelf allocation for Retailers profit model )
e) Ziifryden 1986:Dynamic programming formulation
of shelf space allocation model
f) Bultez et al. 1989:S.H.A.R.P H model
g) Bookbinder & Zarour 2001:Shelf space allocation
model
There are some software`s which are specifically developed for management of shelf space allocation based on
non optimal methods eg. Spaceman & Apollo. These
software`s have their own limitations & are referred by
many authors in their study & research.
On basis of different surveys conducted it can be said

that the importance of shelf space vary with the product.
Shelf space is effective in case of those products which
have superior quality & competitive prices. There are
some category say toothpaste, soaps, cereals for breakfast where consumers are more likely to be brand loyal.
They are indifferent to shelf space in case of such products categories. At the same time there are certain product categories like coffee, beer, tissues, detergent, toilet
paper where price is the driving element. If these products have competitive price then only shelf space is relevant for shoppers. In case of product categories like
cookies & chips shelf space will work only when their
taste meets the expectation of the consumers. On the
basis of the surveys conducted & research done by various elite classes it can be concluded that no doubt shelf
space is very crucial but alone it cannot be the driving
element. Manufacturers shall quantify the amount of
profit they are gaining compared to premium amount
they are spending for getting desired shelf space. If it is
worthy then only it shall be opted or else shall be avoided. Efficient retailers are well aware of his product`s
demand & keeping them in mind if shelf space management is done it will help in reducing inventory cost.
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A well managed shelf space not only helps in building

tough rapport with vendor but also result in higher
amount of customer satisfaction. A famous quote Merchandise handled is merchandise half sold describes the
value of shelf space. The consumers are more inclined to
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ISSN No: 2319-5614
purchase the product which is efficiently displayed.

However it shall be born in mind that by Shelf Space
management sales cannot be increased but only be diverted
from
one
brand
to
another.


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Journal of Business Management & Social Sciences Research (JBM&SSR)

Volume 3, No.10, October 2014

ISSN No: 2319-5614